Building a green recovery: How the UK can meet its climate targets as it recovers from Covid-19

The government has committed to securing a ‘green recovery’ from Covid-19. But the package of policies it has announced so far has been modest compared with other countries, and some have been poorly designed and implemented. This report assesses the government’s approach so far and offers recommendations on how to build a green recovery. 

There are important decisions ahead. The government is due to publish a net zero plan before hosting COP26 in November, the chancellor has a budget to deliver in the autumn and the Treasury is due to run a spending review. This paper – which draws on a roundtable organised in partnership with the City of London Corporation attended by civil servants, climate and energy experts, and finance professionals – offers reflections on how the UK can build a successful green recovery. It recommends that: 

• The Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) should take responsibility for securing a green recovery. Co-ordination of the green recovery within government has been lacking, with policies caught between conflicting departmental aims. This mirrors the weak co-ordination of net zero planning that the Institute for Government has criticised in the past. The Treasury and BEIS need to bring departments together to develop a view of the overall green recovery package, how the policies within it fit together, and underlying dependencies such as skills and investments. 
   
• The Treasury and other departments should assess where there is the strongest case for targeting further measures. As the UK exits lockdown once more, the chancellor has the opportunity to build on the green recovery measures announced so far. Local and sectoral conditions will determine which interventions might have most impact. But the evidence suggests there may be particular opportunities in areas including housing and transport. The Treasury should examine where the net zero transition and economic recovery can be most effectively aligned. 
   
• The government should improve the design of green recovery policies, learning from the failure of the Green Homes Grant. Policy makers need to be realistic about the capacity of local supply chains and consult with those involved in delivering changes. Projects will need to be genuinely ‘shovel-ready’ if policies are to be designed to provide a short-term boost; in other areas government should take a longer-term approach that builds capacity, or consider pilot or demonstration projects. 
   
• The government should develop a green skills plan. The availability of a skilled workforce will be a major determinant of the success of green recovery policies and the net zero transition. But while references to ‘green jobs’ are prominent in ministerial speeches, the government has yet to set out a clear view of the quantity and type of skills that will be needed across the country, and how it will support the development of those skills. 
   
• The government should involve local authorities more actively in the design and delivery of green recovery policies. Understanding local conditions will be critical to the success of the transition to net zero, particularly in areas like housing or supporting industrial clusters. But so far local authorities have often not been actively involved in designing green recovery interventions. 
   
• The government should ensure the new UK Infrastructure Bank supports the green recovery and assess how to further support private investment. Long-term regulatory signals and stability are likely to be more important to the green transition than government investment. It is crucial that the government ensures that green recovery measures are in line with its broader plan to encourage and de-risk private sector investment.